In the past, Amazon’s blockchain team at Amazon Web Services (AWS) created a proprietary blockchain called QLDB or Quantum Ledger Database. Today, they are looking to take it a step further and put some parts of their advertising business in a blockchain.
Just last week, Amazon posted a job posting on LinkedIn calling for a senior software engineer with blockchain experience. Said software engineer would be part of their Advertising Fintech team to focus on a Blockchain ledger.
The new Advertising Fintech team will be based in Colorado. According to the job description, the hired software engineer will aim to provide transparency on trans-national financial data by focusing on billing and reconciliation systems. Other than that, the job entails work on lead design, implementation, and deployment of core components.
“This is an opportunity to define a technology architectural direction of a greenfield area for Amazon’s advertising business using Blockchain technology,” the job posting also stated.
The e-commerce giant provided no further details regarding the job posting at this point. There is still no telling what kind of blockchain Amazon plans to use for its advertising sector.
Ad business is decelerating
In Amazon’s first-quarter report, they revealed that the advertising arm experienced slower business. Compared to a 60% growth in the previous quarters, Amazon only achieved 34% revenue growth to $2 billion in the first quarter of the year.
Revenue growth was down, particularly with ad sales, which is the business’ predominant income stream. For the first quarter, total revenue growth was only 16.9%, which is the slowest growth since 2015. Revenue growth was only 17% in North America compared to 46% last year, and global growth was only 9% from 34%
In spite of the deceleration of revenue growth, Amazon’s advertising arm was more profitable with a net income of $3.6 billion for the first quarter.
Blockchain transformation for online advertising
According to cybersecurity company Cheq, global ad fraud is foreseen to cost a whopping $23 billion in 2019. It is no wonder why many companies, Amazon being one of them, are looking at blockchain as a solution. Other giants such as Unilever and IBM have turned to blockchain to have more transparency in the advertising supply chain by recording transactions in real-time.
Using blockchain is a revolutionary solution to cut advertising costs. Many companies experience ad fraud because of the inherently opaque system that is in place without blockchain. The money spent on advertising could end up being spent on mediators and ad fraud, which means less value for the companies that paid for advertising. More importantly, there is no way of telling if advertisements are being priced reasonably.
Can blockchain fix the problem with ad fraud? In most cases, yes. Generally speaking, a blockchain provides full transparency of transactions between advertisers and their publishers. In the process, a new cryptocurrency-powered ecosystem is created, which will detect and reduce ad fraud.
How can blockchain change the future of digital advertising? Well, blockchain is largely believed to play a role in the future for both advertisers and end-users. According to experts at Consumer Technology Association during CES 2019, blockchain can bring clarity for all sides as a neutral third party tool for verification. With benefits to both user and buyer, the use of blockchain for digital advertising means more transparency, control, and choice.
Amazon looking to secure their ad transactions
Amazon is just one of the many companies that have tried using blockchain for their ad tech. To simplify the value chain, blockchain aims to create a distributed ledger to get everyone on the same page. This is important to keep everyone in the loop on where the advertising dollars are going and avoid discrepancies in the process.
An example of such is the blockchain recently launched by AdLedger, an ad industry blockchain R&D consortium, which was published by Salon Media and IBM. The main goal of this blockchain is to bring transparency to the ad supply chain and prevent advertising intermediaries from taking a cut off the payment while en route to the publisher from the advertiser.
Christina Cacciapouti, the executive director of AdLedger, said, “Basically what we believe is that the existing protocol was built by those middlemen – and was built to enrich them, for lack of a better term.”
The trial of the blockchain showed how to do a media campaign with fairness and transparency. Presence of the blockchain tracked spending through the entire process, revealing which middlemen are taking more and giving less.
“The shared ledger on the blockchain will act as a single source of truth creating indisputable transparency for both the brand itself and the publisher which will aid in greater accuracy during reconciliation as well as make advertiser spend much more efficient,” Ryan Nathanson, Salon Media’s chief operating officer, stated.
Amazon’s own blockchain service
Amazon’s cloud computing branch, Amazon Web Services, revealed a new service which will let clients create their own cloud-based blockchains with Hyperledger Fabric or Ethereum as templates. Amazon Managed Blockchain is a fully managed service that allows users to build programs where multiple entities can make transactions needless of a central authority. The service can be used for trading and asset transfer, retail, and supply chain.
Despite the leap in the blockchain industry, AWS did not make any guarantees that all types of clients will benefit from their cloud-based blockchain service. Only specific problems with business can be solved by using it, which aren’t experienced by many clients.
AWS’s general manager, Rahul Pathak, explained, “You can imagine a large manufacturer who wants all of its partners to write on its ledger about trading items through its network. Blockchain network brings in unnecessary complexity because you don’t need the distributed trust or the consensus elements.”
With Amazon Managed Blockchain came QLDB or Quantum Ledger Database. This centrally administered immutable data ledger aims to provide an easier way to build cryptographically-protected databases. It allows clients to record the history of economic and financial activity within the organization.
Amazon’s QLDB removes the need for complicated development effort in building your own applications. In terms of security, the ledger’s data history cannot be changed, and you can easily verify that your application has not been modified.
Today, QLDB is available for limited preview and you can check it out on their website. Hyperledger Fabric is available through AMB if you’re looking for a blockchain.
No definite plans as of now
For now, it is not yet certain what Amazon’s plans are. They could either start using their blockchain-based advertising conciliation platform or develop a solution internally. Historically, Amazon is known for developing solutions internally, which they offer for others’ use eventually. The QLDB data ledger by Amazon Web Services is an example.
“We have a very long and healthy tradition of bringing forward internally developed projects at Amazon,” Pathak told Coindesk at a conference on May 2019.
With that being said, the project may not materialize, or it might take a lot of time before the product is offered to the public.